Do you know where the word ‘’shylock’ originated from? The famous writer Shakespeare was at that early time already aware that a cash advance loan will stand in good or bad before the profits come in. The ‘Shylock Jew of the book’ work was to give people an urgent loan to meet their immediate needs before the profits come in. Read the ‘Merchant of Venice book’ by William Shakespeare for full details.
Nowadays the term cash advance loans can be given the alternative name, payday loan. The loan helps people to go through up to their next paycheck when they get broke or unexpected money needs arise. Before the credit card and the online loans came up, many parts of the world had money lenders commonly known as ‘shylocks’ preying mostly on salaried people.
These days the business has been beautifully packaged with names such as credit card-cash advance loans and online loans among others. The loan is marketed as convenient loan advances that will make you avoid things such as overdraft charges, reconnection/reactivation fees for such things as power bills etc.
Banks came up with the credit card to enable people to acquire a short-term cash loan at an ATM point or bank. The cash advance works differently from a bank withdrawal in that it has to be paid back with fees added. Though a convenient way of getting cash when needed, it can be expensive. Some of the well-known cards that give you cash are the MasterCard and the Visa.
The credit card has a limitation as to how much you can withdraw in form of cash from your entire credit line. The limitation is necessary as people can be tempted to misuse their funds through the use of the cards. It is also an expensive way to get cash as the cards come with various expenses.
l Cash advance fees-The card issuer puts on some card charges at a flat rate for every advance. This can range from $5 to $10. Others will charge a percentage of the amount withdrawn which is often at 5%.
l Bank and ATM fees- The charges get imposed by the institution used per transaction.
l Interest- You will find often the interest charged for the cash advance is higher than the rate that is charged on purchases.
Online cash advance
An online cash advance is marketed as a loan without the hidden costs like those that come with credit cards. The online cash advance is a short-term loan that is not in the form of hard cash. It is a loan that is immediately on approval channeled through your bank account. The amounts advanced are usually small to be paid back in one to two installments. The online loans can be termed as payday loans, but do not require one repayment only on the payday. The most important criteria for these loans are for the applicant to meet certain employment or other income requirements. But as a point to note the interest rates applied for these short-term loans are quite high.
Word of caution
Back to our introductory paragraph. If you have read the book you will already have known that the ‘Shakespeare’ character ‘Antonio’, ended in big trouble. That was just an ‘act’ but holds true for the real world. There can be real dangers in relying on cash advance loans.
l Financial trouble- It is quite easy to get a cash advance and you can easily get addicted. Every time you have a small problem you will be tempted to rush there instead of persevering. In a very short time, you might find yourself in big debts which you can’t pay.
l Fees and Interest- The rates charged on cash advance are quite high for both card credit and online loans. They do not offer a grace period and interest will start accruing immediately.
l Substitute for saving- The easy accessibility of this kind of easy loans minimizes the need to save.
l Problems on Payday- It is quite common that you will have problems on most paydays especially when the issue becomes a habit. Payday loans have a tendency of decreasing your earnings as time passes by. The interest is paid upfront meaning your pay reduces that amount. You will finally land into big problems.